by The Landlord
Price softening bad news for supply
Recent price softening in the Auckland market will help to make the city’s housing supply problem much worse, the Property Institute has warned.
The Institute’s chief executive, Ashley Church, said rising interest rates combined with the LVR-induced market slowdown could reduce price pressure and scare people chasing capital gain out of the market – but that wasn’t necessarily good news.
“Auckland still needs over 40,000 new houses and we’ve long been of the view that the way to get those built quickly was to divert property investors away from existing dwellings and into investing in new homes. Unfortunately, it now looks even less likely that that will happen”.
The focus on strangling speculation rather than increasing supply means many investors will now disappear from the market, which could kill market activity and leave the supply deficit unresolved, he said.
Read more: Market slowdown different this time
First state house sales completed
The first large scale transfer of state houses to a community housing provider (CHP) has now taken place, marking a major milestone in the government’s controversial social housing reform programme.
As of April 1, Accessible Properties has taken over the ownership and management of more than 1100 former Housing New Zealand properties in Tauranga.
Social housing minister Amy Adams said the ownership of the properties may have changed, but they remain social houses and nothing has changed for the tenants. “But the sale proceeds can be used to build even more social houses in the areas of most demand.”
To date, the programme has been chequered – thanks to the failure of plans to sell state houses in Invercargill and Horowhenua – but the government still plans to try and sell up to 2,500 state houses in Christchurch.
Read more: More state house sales on the agenda
Rental yield pressure could deter investors
Upward pressure on rents nationwide could end up acting as a deterrent to investors entering the market, according to new forecasting research from Crockers and Infometrics.
It showed that rents outside Auckland and Canterbury rose by an average of 8.9% in 2016, although rental growth in the Auckland region slipped to just 3.3% per annum in November 2016.
This is impacting on gross rental yields and signs of a renewed pick-up in house price growth suggest there will be further downward pressure on rental yields in 2017 – which could deter investors from buying property.
“But any significant improvement in rental yields is unlikely before 2018, when a possible correction in house prices could be accompanied by steady or rising rents, enabling rental yields to recover from their current very low levels,” the forecast said.
Read more: Rent for “typical” New Zealand house hits all time high
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